USDA releases first supply, demand report of year

By Susanne Retka Schill | January 01, 2008

Web exclusive posted Jan. 11, 2008, at 10:29 a.m. CST

USDA's first major report of the year gives official numbers to what is already mostly factored into the markets-this year's U.S. ending stocks for wheat are forecast to be the lowest in 60 years. The world-wide short wheat crops of recent years on top of the newly emerged demand for biofuels have added fuel to record-breaking prices for all crops. USDA's Jan. 11 World Agricultural Supply and Demand Estimates give the numbers.

Corn projections

U.S. corn ending stocks for the 2007-'08 crop year are reduced 359 million bushels from the previous report based on lower estimated production and increased feed and use. Corn supplies for 2007-'08 are also lowered 94 million bushels based on lower estimated production. While the acreage planted to corn was not adjusted, the yield per harvested acre was dropped from the earlier estimate of 153 bushels per acre to 151.1 bushels per acre. That compares with last year's national average yield of 149.1 bushels per acre. The season-average farm price for corn is projected at $3.70 to $4.30 per bushel based on the sharp rise in both cash and futures prices that have been sustained during recent weeks.

Oilseed projections

U.S. oilseed production for 2007-'08 is estimated at 80 million tons, down 100,000 tons from last month, and 16.6 million tons below last year's record. Small reductions for soybean and canola production were offset by increases for sunflower seed, cottonseed and peanuts. Soybean production is estimated at 2.6 billion bushels, down 9 million bushels from last month's estimates based on a slightly lower yield. The soybean yield is estimated at 41.2 bushels per acre. Soybean exports and crush projections are unchanged from last month. Soybean stocks are projected at 175 million bushels, down 10 million from last month. If realized, stocks would be at the lowest level since 2003-'04. Soybean oil stocks are projected higher this month reflecting increased production due to a higher extraction rate. The U.S. season-average soybean price range for 2007-'08 is projected at a record-high $9.90 to $10.90 per bushel based on the sharp rise in cash and futures prices in recent weeks. Soybean oil prices are forecast at 45.5 to 49.5 cents per pound compared with 41 cents to 45 cents last month.

Wheat projections

While biofuel feedstock buyers generally don't need to pay close attention to what's happening in the wheat market, this year the short world crop is helping drive all crop prices up. USDA's WASDE report said its U.S. wheat ending stocks projections for 2007-'08 are raised this month by 12 million bushels due to lower projected domestic use. At 292 million bushels, this year's ending stocks are forecast to be the lowest in 60 years.

An important detail in the use projections is that USDA reduced projections for seed use by 2 million bushels based on lower-than-expected hard red winter wheat planted area as reported in Winter Wheat Seedings. The season-average farm price is projected at $6.45 to $6.85 per bushel, reflecting strong cash and futures prices and lower-than-expected hard red winter wheat seedings. The projected range is well above the record of $4.55 per bushel in the1995-'96 crop year.